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A.M. Kitco Metals Roundup: Comex Gold Steady-Weak amid Firmer U.S. Dollar Index; FOMC Statement Awaited

(Kitco News) - Comex December gold futures prices are steady to weaker in quieter trading early Wednesday. Traders are awaiting the results of the two-day meeting of the U.S. Federal Open Market Committee, due out early Wednesday afternoon. A firmer U.S. dollar index is somewhat limiting buying interest. December gold last traded down $2.20 an ounce at $1,806.90 an ounce. Spot gold last traded down $0.40 an ounce at $1,805.00. December Comex silver last traded down $0.017 at $40.12 an ounce.

Traders are focusing upon the conclusion Wednesday afternoon of the two-day meeting of the U.S. Federal Open Market Committee, after which the Fed will issue statement. The market place expects the FOMC to announce some fresh monetary stimulus measure. Many believe the Fed will implement a so-called "twist" move, which is an effort to keep longer-term U.S. interest rates at very low levels. Such a move by the Fed should be gold and commodity-market bullish, as it would not only make the returns on hard assets more appealing, but it would also likely put some downside price pressure on the U.S. dollar index, or at least limit its upside movement.

The U.S. dollar index is trading firmer Wednesday and that is an underlying bearish factor for gold. The dollar index bulls have the near-term technical advantage following recent gains. Look for gold later Wednesday to take its price cues from how the U.S. dollar index reacts to the FOMC statement.

Crude oil futures prices are trading modestly lower early Wednesday, which is also a bit bearish for the precious metals. Crude oil will remain an important "outside market" that will have an influence on the precious metals markets.

The European Union sovereign debt situation has simmered down just a bit the past couple days, from the market place's perspective, as it looks like Greece will get its latest loan package that will get it by for the next few months. Talks on the matter are ongoing among EU and IMF officials. The EU debt situation remains a bullish underlying factor for gold, even though it's likely that the present problems regarding EU debt have likely been mostly factored into present market prices.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, existing home sales, the weekly DOE energy stocks report and the FOMC meeting statement.

The London A.M. gold fixing was $1,810.25 versus the previous P.M. fixing of $1,799.00.

Technically, December gold futures trading has turned very choppy. This type of "backing and filling" action on the charts is not surprising. No chart damage has occurred recently, but the bulls are still a bit worried about the specter of a bearish double-top reversal pattern forming on the daily bar chart, if gold prices show more losses this week. At present, the gold market bulls still have the solid overall near-term and longer-term technical advantage. Bulls' next upside technical objective is to produce a close above solid technical resistance at last week's high of $1,865.20. Bears' next near-term downside price objective is closing prices below solid technical support at last week's low of $1,765.40. First resistance is seen at the overnight high of $1,819.40 and then at this week's high of 1,832.90. First support is seen at $1,800.00 and then at $1,793.80.

December silver bulls still have the slight overall near-term technical advantage, but have faded a bit and need to show fresh power soon. Bulls' next upside price objective is producing a close above strong technical resistance at last week's high of $41.60 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $38.81. First resistance is seen at the overnight high of $40.57 and then at $41.00. Next support is seen at the overnight low of $39.77 and then at $39.50.

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By Jim Wyckoff contributing to Kitco News; jim@jimwyckoff.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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